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Read the case study and answer the questions that follow: DREAMIT ELECTRONICS LTD: PROJECTIONS FOR 2 0 2 4 AND 2 0 2 5 After

Read the case study and answer the questions that follow:
DREAMIT ELECTRONICS LTD: PROJECTIONS FOR 2024 AND 2025
After posting excellent sales and net profit in the previous year Dreamit Electronics Ltd set its sights on growth and innovation as it celebrated its 10th anniversary in 2023. It has continually strived to become the leader in the electronics industry in South Africa. The company is also committed to being a good corporate citizen, as it strives to fulfil both its economic and social responsibilities.
The following reflects the financial position of the company on 31 December 2023:
The carrying value of the fixed assets was R30000000 whilst the current assets comprised inventory of R9400000, accounts receivable of R8000000 and cash of R1600000. The equity consisted of ordinary share capital, R17000000, and retained earnings of R6400000. An amount of R22000000 was owed to Mesa Bank for a long-term loan. Trade creditors were owed R3600000.
The following projections and proposals were made by Dreamit Electronics Ltd for 2024:
The sales are expected to increase from R30000000 in 2023 to R40000000 in 2024. All the sales are on credit. Accounts receivable is based on a collection period of 36.5 days. Accounts payable must be calculated using the percentage-of-sales method. The gross margin and net profit margin ratios are expected to be 25% and 10% respectively for 2024. All purchases of inventory are on credit. Purchases for 2024 are projected at R25000000. The company expects to show a net increase in cash of R500000 during 2024. R24000000 will be spent on additional land and buildings during the fourth quarter of 2024. The total depreciation for 2024 is forecasted at R4000000. During January 2024,1000000 ordinary shares are expected to be sold at R4 each. Dividends of R3000000 are expected to be recommended by the directors at the end of 2024. These dividends will be paid during 2025. R5500000 will be paid to Mesa Bank during 2024. This amount includes R2000000 for interest on loan. The amount of external funding (non-current debt) required must be calculated.
Dreamit Electronics Ltd has identified a new machine that it is considering for purchase at the start of 2025. The cost the machine is R4000000. The machine is expected to have a useful life of five years. No scrap value is anticipated. The annual profits that are expected to be generated from the machine are as follows: Year 1 R600000; Year 2 R620000; Year 3 R700000; Year 4 R660000; Year 5 R560000. The cost of capital is 15%. Depreciation is estimated at R800000 per year.
QUESTIONS
1. Prepare the Pro Forma Statement of Financial Position as at 31 December 2024.
(Ignore the investment opportunity for 2025.)
2. Refer to the investment opportunity for 2025(the purchase of a new machine) and calculate the following. Ignore taxes. Use only the four-decimals present value tables that appear in the attached image.
2.1 Accounting Rate of Return on average investment (expressed to two decimal places).
2.2 Net Present Value. Your answer must reflect the calculations of the present values and NPV.
2.3 Internal Rate of Return (expressed to two decimal places) if the net cash flows are R1200000 per year for five years. Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation.
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